The Northland Port Corporation last month began a process to buy back more than 2.1 million shares (five percent of overall shares) in a year-long move to return surplus cash to its shareholders.
The Council – the Port Corporation’s biggest shareholder – had wanted to sell up to 1,139,760 million of its shares back to the corporation in a deal that should have secured the NRC close to $3 million, while still maintaining its overall shareholding in the corporation at 52.4 percent.
However, Council Chief Executive Officer Ken Paterson says the corporation – which in turn owns 50% of Marsden Pt deepwater port operator Northport Limited – has effectively shut the Council out of the process. To date, just 100,000 of the Council’s shares had been repurchased at $2.45 a share.
By repeatedly undercutting market rates the corporation had saved itself just a few thousand dollars with each trade. However, in the process – assuming an average price of about $2.50 a share - it had potentially cumulatively cost the Council and its ratepayers about $2.5 million in lost sales to date.
Mr Paterson says the corporation’s action have also effectively carved more than $12 million off the market value of all the shares held by investors.
He says Councillors are at a loss to understand why its offers are being knocked back when the entire purpose of the buy back was supposedly to return surplus cash to shareholders and the Council was the single biggest of those.
‘We’re not seeking special treatment and have consistently tried to offer a relative portion of our shares for sale at a price that matches the latest trading prices.
Despite this, on almost every occasion, the Council has not been able to sell its shares because Northland Port has repeatedly lowered its purchase price.”
Mr Paterson says while the Port Corporation is entitled to purchase shares at the lowest price it can, “the way it is going about this is simply not a fair and equitable treatment of shareholders”.
He says the Northland Regional Council is not prepared to drive the market value of Northland Port down as that would have a wider effect on all shareholders, regardless of the number of shares they own.
“Unfortunately, it seems that Northland Port does not share this concern.”
Since the buy back began in mid-February, the Northland Port Corporation had already purchased well over half the roughly 2.1 million shares it had originally intended to rebuy over a 12-month period.
“Time – and ability to sell shares – is effectively running out for us. As a result of purchases to date, Northland Port Corporation has already driven its own share price down from $2.70 (at the time the buyback was announced) to $2.40.
He says Regional Councillors had met in Whangarei today to discuss their next course of action and were deeply unhappy at the way they perceived ratepayers – and Northland - were being treated.